QUESTION 21 Luther Industries market value of equity is $450 million. In addition, Luther has $150 million in outstanding debt. Suppose Luther's equity cost of capital is 13%, its debt cost of capital is 7%, and the corporate tax rate is 21%. Luther's weighted average cost of capital is: 09.8% 010,8% 011.1% 013.0%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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QUESTION 7
A five-year bond has a 13% coupon rate and is selling for $1,123. Calculate the yield-to-maturity on the bond assuming semiannual
coupon payments and a $1,000 face value.
07.0%
08.6%
09.8%
012.3%
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n
QUESTION 21
Luther Industries market value of equity is $450 million. In addition, Luther has $150 million in outstanding debt. Suppose Luther's
equity cost of capital is 13%, its debt cost of capital is 79%, and the corporate tax rate is 21%. Luther's weighted average cost of capital
is:
09.8%
010,8%
011.1%
013,0%
Transcribed Image Text:QUESTION 7 A five-year bond has a 13% coupon rate and is selling for $1,123. Calculate the yield-to-maturity on the bond assuming semiannual coupon payments and a $1,000 face value. 07.0% 08.6% 09.8% 012.3% Show Transcribed Text n QUESTION 21 Luther Industries market value of equity is $450 million. In addition, Luther has $150 million in outstanding debt. Suppose Luther's equity cost of capital is 13%, its debt cost of capital is 79%, and the corporate tax rate is 21%. Luther's weighted average cost of capital is: 09.8% 010,8% 011.1% 013,0%
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